Jumia Technologies is set to shut down its food delivery business in Kenya and six other African countries by the end of 2023.
The company will also halt business in Nigeria, Uganda, Morocco, Tunisia, Algeria, and the Ivory Coast as the year closes to focus on growing its core online retail business.
As for employees dedicated to the food delivery section, they will transition to the continuing physical goods in these countries.
“The economics are tough in this market because the costs are very high and there is plenty of competition so there is downward pressure on the commissions that we make and upward pressure on marketing costs because everyone is fighting for customers,“ CEO Francis Dufay said.
He added,
“It’s a segment that’s very difficult across the world, with very challenging economics and big losses. It’s also a segment that is extremely competitive across the world and Africa,”
As Reuters reports, Jumia is aggressively cutting costs to turn profitable, including headcount reductions, exiting everyday grocery items, and reducing delivery services not related to its e-commerce business.
The move is in line with Jumia’s “strategy to optimize its capital and resource allocation and to continue its path to profitability,” the retailer said, adding that Jumia Food is not suitable to the current operating environment and macroeconomic conditions.
Jumia Food represents about 11% of Jumia’s general merchandise value for the nine months ended Sept. 30 and has not been profitable since its inception.
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